Spending would rise 3.5 percent from this fiscal year’s
$33.3 billion as the state makes a $2.25 billion payment, the
biggest ever, to its underfunded pension system. Ninety-four
percent of budget growth is for pensions, health benefits and
debt service, leaving little to add other services and programs,
Christie told lawmakers yesterday in Trenton.

The governor, a second-term Republican and potential
presidential candidate, urged Democrats who control the
legislature to approve more changes in the state’s pension and
benefit system. A 2011 overhaul of benefits that Christie
persuaded Democrats to support didn’t go far enough, the
governor said, without saying what else needed to be done.

“Only 6 percent of new spending can be focused on the
areas where we really want to dedicate our resources: education,
tax relief, public safety, higher education, drug
rehabilitation, health care,” he said. “We are in danger of
having these costs overwhelm our budget, monopolize our
resources and threaten our ability to continue to fund the
priorities we care about most.”

Pension Headache

Excluding pensions, health benefits and debt service,
Christie’s budget proposal for the year that starts July 1
totals $25.5 billion, which is $2.2 billion smaller than in
2008, according to the governor’s office.

“Over the last five years, we have cut discretionary
spending by $2.2 billion,” Christie said. “This has been an
era of fiscal restraint.”

The governor should focus on improving the economy to boost
revenue, not cutting obligations, Democratic lawmakers said
after his speech. Christie needs to create jobs as New Jersey
trails neighbors in employment growth, Senate President Stephen
Sweeney said.

“If we stay the course, the pension system is going to be
fine,” Sweeney, a Democrat from West Deptford told reporters in
Trenton. “We need to put people back to work and we need a plan
to put people back to work. That will fix your revenue
problems.”

School Aid

Christie’s budget would provide a record $9 billion in
public-school aid, an increase of $36.8 million from this year,
and $2.3 billion for higher education, or $159 million more.

He expects to generate more than $200 million of new
revenue from sales taxes on out-of-state Internet retailers
doing business in New Jersey, and the closing of some corporate-tax loopholes. At the same time, the budget includes $600
million in business-tax cuts, the treasurer said.

New Jersey’s pension deficit reached $53.9 billion in 2010
after the state expanded benefits and skipped payments over a
decade. The gap fell to $36.3 billion after Christie signed
bills to boost employee pension and health-care contributions,
raise the minimum retirement age for new workers and freeze
cost-of-living adjustments. It rebounded to $47.2 billion as of
July 1, 2012, as Christie made only partial contributions.

Christie signed a law in 2011 requiring the state to make
one-seventh of its pension contribution in fiscal 2012 and then
raise the payment each year until it reaches the full annual
amount in 2018. The payment for this fiscal year, 2014, is
$1.675 billion, or three-sevenths.

Teachers Union

The $2.25 billion contribution proposed for 2015 is almost
equal to the total payments made in the 10 years before Christie
became governor, according to his office.

The governor, during his first term, targeted the New
Jersey Education Association and other public-employee unions
because of what he called too-generous contracts negotiated by
prior Democratic administrations.

Workers are already doing their part, NJEA President
Wendell Steinhauer said in a statement.

Christie is “misleading New Jersey residents about the
state of the pension system,” Steinhauer said. “As a result of
deep, painful cuts absorbed by public employees and retirees in
2011, pension costs going forward have been curtailed, and the
state is finally on the road to responsible, sustainable pension
funding practices.”

The New Jersey chapter of Americans for Prosperity, a
national group that advocates smaller government and lower
taxes, panned Christie’s proposal. The group said in a statement
it “did not offer much in the way of free-market, pro-growth
ideas.”

“While the governor is making a modest raise in spending
this year, primarily to the pension system, it is an increase in
spending nonetheless,” said Mike Proto, its spokesman.